Following the recent announcement of plans to raise up to $5M from an equity financing, I've wondered what the future looks like for Aton Resources (TSXV:AAN). Read on for some info about what Aton has been up to over the last couple years. As Churchill quipped, "The farther back you can look, the farther forward you are likely to see." Please note that I produce sponsored content for Aton.
Rodruin was Aton's priority in 2018, following the discovery of the "lost mountain of gold" in December 2017 at the end of a regional exploration program. I thought the regional program was a good idea in 2017 because it was ambitious, but it was risky. I was grateful to hear CEO Mark Campbell say that Rodruin was one of the last targets they visited as part of that program for the message it conveys: Don't give up.
Aton finished the phase 1 program at Rodruin in December 2018. They drilled 50 holes for +4,000 meters, adding new information to a good dataset for the project including channel samples, rockchip sampling, and geological mapping. Aton has been steadily turning over the puzzle pieces at Rodruin. The more pieces they turn over, the more they get a sense for whether they can put the pieces together to make a complete picture.
You may notice that +4,000 meters over 50 holes is an average of around 80 meters per hole, which is not particularly deep. There's a lot to say about that. For one thing, some of the holes were abandoned at shallow depths when they hit old workings (5 meters). The deepest holes went down 200 meters, like hole 50.
Shallow holes in an oxide gold target are one thing, but a key question at Rodruin remains: What's going on below where the ancients were mining?
I mentioned hole 50 because it went down 200 meters but you should note that it started from the Central Valley, which is another 60 meters or so below Aladdin's Hill where they first found some of the old mine workings that marked the initial discovery. You may recall hole 3 started things off with a bang when RC drilling hit some of the high-grade gold seen at surface. That was a great way to start the drilling and I can't wait for them to encounter more of that stuff the ancients were mining. In the mean time, questions about the fresh sulphides below the old mines are key.
In the last news release on Phase 1 results, they wrote "The identification of a deep primary equivalent of the widespread surface mineralisation provides strong support to the Company’s interpretation that Rodruin has the potential to host a large gold deposit... ROP-050 has now also confirmed the presence of high grade zones in the primary sulphide mineralisation." (January 29, 2019)
It's great to hear about this primary zone of mineralization as it focuses the next round of questions -- how deep is it? How thick is it? How far does it carry grade? These are the basic questions as we move towards understanding if there's something big hiding at Rodruin.
A lot of the holes in Phase 1 were drilled between Aladdin's Hill and the Central Valley, which was a great place to start. The high-grade gold showings at surface at Aladdin's Hill were calling for follow-up and this first program did that. What's more, they've started to show the geology is complex, with shallow structures that are dipping parallel to the hillside. This was a well-designed program that is starting to establish continuity up-and-down the South Ridge. In a recent interview, Exploration Manager Javier Orduña described it this way,
"We have a reasonably good idea of what the structures look like in that area. We have a series of fairly flat-dipping, thrust-type structures, north-dipping, one of which basically parallels the hillside on the north side of the South Ridge. And that, in itself, is a fairly major structure, which basically controls and actually parallels the actual surface of the hillside.... It's a little bit complicated because these thrust-type structures are not continuous and they appear to die out laterally. Rather than individual structures, they're more like dislocations than continuous structures. They are quite substantial, but they also die out laterally." (Interview)
If you study the channel sampling they've done, then you'll see that there is limited coverage between Aladdin's Hill and the Central Buttress. It's good to know they have a question in mind as reflected in this quote from Mark Campbell's 2018 review here, "Phase 2 will continue to follow up on Phase 1, and will additionally focus on previously untested areas of the South Ridge, such as those areas under superficial cover, as well as attempting to delineate and expand the zone of primary mineralisation identified in holes ROP-017 and ROP-050."
The Phase 2 program may be smaller than the first. They can test the primary mineralization with 200m holes, like hole 50, and may only need 6-8 such holes between holes 3 and 50 to start getting a good sense for what's going on down there. If they drill another 10 holes in the area between Aladdin's Hill and the Central Buttress averaging 150m, then we're looking at 3,000 meters of drilling overall. The roads they've made on the South Ridge provide good access for drilling in both these areas, so this second campaign could be quicker than the first.
Don't forget about the North Ridge!
Drilling at the North Ridge could be exciting with grab samples from old workings returning high-grade gold, but it's a more rugged area. As Javier said in our interview, "We think it's gonna take at least a month and a half to get a road around that side..." That's okay with me because the road-building is relatively cheap. If they can build that road while Phase 2 drilling is underway, then they are putting themselves in a good position to have several choices at the end of Phase 2: move the drill from the South Ridge to the North Ridge at Rodruin to drill the first holes ever around the old workings, or send the drill further away to work at other areas on the Concession like Hamama West, Sir Bakis, Abu Gaharish or others. It's difficult to set a firm plan, especially while they're raising funds for it, but the range of options is important because it means Aton has runway to keep doing meaningful field work.
All this work takes time. After Phase 2 drilling at Rodruin, they will have a window of time to model the new data and get ready for Phase 3 at the South Ridge. Will they need a 3rd pass to put together a strong initial resource estimate? What would it look like? That's a bit hard to say at this point, but it could include core drilling. Note that the track-mounted drill they have at site is capable of drilling core.
A bigger question for me is timing -- could they do a Phase 3 program at Rodruin in 2019? That would sure make for a busy year between Phase 2 drilling, moving the rig to another area, and then bringing it back for Phase 3 work. I guess that's why they're talking about a $5M financing!
Rodruin is exciting and deserves a lot of attention, but one of the great things about Aton is the large land package gives lots of targets to explore. In an interview with CEO Mark Campbell in December 2018, I asked, "Is 2019, 'Rodruin, Rodruin, Rodruin'?" As you may know, he said no. There are a lot of targets competing for Aton's attention. Read his full reply here,
"No, not "Rodruin, Rodruin, Rodruin". First of all, you can't actually go in and say I'm going to drill 20,000 meters tomorrow. You have to step back. It's pretty complex geology...The fact of the matter is that we need to have a look at the other stuff that we have. We're set up to drill Sir Bakis. We're set up to drill Abu Gaharish, Semna, Bohlog, West Garida... I've got to do some more drilling at Hamama anyway to lift my resource from inferred to indicated. I've got plenty of other drilling to do and the drilling contractor needs to know that he's got consistent work for his rig, so it's a win-win situation. We need to drill this stuff and Capital Drilling wants us to drill it. We've got 20,000 metres to drill and I probably got another 20,000 meters on top of that."
What are some of these targets that deserve all this drilling? Dig into my post here to learn my thoughts on some of the "Known Unknowns" generated by Aton's 2017 Regional Exploration program. It was a productive program that generated basic info on a lot of targets, which are still waiting for follow-up.
One to consider is Sir Bakis. It's an old mine located by the side of a desert road where Aton did some good trenching and sampling in 2017. It's waiting for them to send the track-mounted drill rig there and get to work. In news release announcing the results of the surface work, Aton wrote "there are strong similarities between the Sir Bakis prospect and other significant gold mines and projects within the Egyptian Arabian-Nubian Shield, where mineralization is associated with high grade quartz veins and large lower grade zones of stockwork and sheeted vein mineralization, largely hosted in granitoid host rocks, such as Sukari, Fawakhir-El Sid, Hammash and possibly Anbat..." The possibility of putting the first drill holes into something like Sukari sure gets me excited!
Read Mark Campbell's comment from the same September 2017 news release below. It's interesting to go back to these quotes to consider what's changed and what's stayed the same:
“Most companies would be happy to have a single exploration district, whereas we have multiple districts at our Abu Marawat Concession area, each with unique geological characteristics. The recent exciting results from Sir Bakis prospect area, and at the old Sir Bakis mine demonstrate the huge exploration potential of the newly identified reduced intrusive related gold mineralization trend at Abu Marawat...”
If you want more still, then consider reading through these 4 interviews I did with geologist Paul Angus about Sir Bakis, which are linked together here.
Another prospective area is West Garida. As geologist Tim Neall explained in our 2017 interview, "It is close to the Hamama deposit, but it is very inaccessible. It is just a kilometer or so east of Hamama and we first accessed it when we constructed a road into this area to conduct geophysics over the Hamama deposit." They found some high-grade gold and old mining pits, which is starting to sound like a familiar refrain for Aton. Again, being close to the road puts this one in a competitive position for top priorities in 2019.
If old mining sites are proving productive for Aton, then it's hard to overlook Semna. A November 2017 news release states, "It has been reported that the Semna mine had the widest vein exploited during the British era of mining in Egypt, which reached up to 6m width in places, and the British reported mining grades of over 2 ounces per ton. Reports from the British Mining Journal from 1905 indicated that some pillars within the ancient stopes assayed up to 5.5 ounces per ton gold." Aton completed a surface sampling program and found that gold mineralization was widespread at surface.
The “Gold Mine Valley” from ancient times at Zeno is alluring, too. With the success at Rodruin, it's hard to ignore another legend of a rich ancient gold mine on the Abu Marawat Concession.
And there are "Unknown Unknowns" at Abu Marawat Concession. Aton could revisit the Regional Exploration Program from 2017 that led to Rodruin discovery -- "Do more of what works". I see this as a lower priority than advancing Known Unknowns mentioned above, but it should not be abandoned. After all, Rodruin was the last target they checked in the 2017 program. What if the next one on the list was even better?!
Finally, Aton faces opportunity to add value with "Known Knowns" at the Abu Marawat Concession. There are several ways to add value at Hamama West in 2019, for example. An in-fill drilling program to improve confidence on the gold resource in the oxide cap would be meaningful, as all the ounces there are currently categorized as "Inferred". See my notes on oxide gold cap here. Considering the previous drilling there, another 40 holes into the oxide cap that are each 40-60 meters for 2,000 meters total would be reasonable to me. Could they do that in 2019 in between Phases 2 and 3 at Rodruin? Would that be the best use of their time and money?
Speaking of money, it's important to consider how much gets spent where. See some of my notes on the topic here. I'm grateful to Aton for publishing a relatively detailed breakdown of "exploration and evaluation expenditures", as I've never quite seen a junior spend so much money assays relative to drilling costs as in those Q3-2018 financials. Of course, that's tilted because of the large amount of channel sampling done on the road cuts along the South Ridge at Rodruin prior to drilling picking up in October but I like to see it as assaying is really what generates the important information about mineralogy. It all reminds me just how much exposure there is across the Abu Marawat Concession and how that makes for great exploration potential.
To see it for yourself, check out this google map I made showing key project locations here.
